Bipartisan Plan for Budget Deal Buoys President

President Obama said at a briefing Tuesday that he saw promise in a Gang of Six budget.Credit
Stephen Crowley/The New York Times

WASHINGTON — President Obama seized on the re-emergence of an ambitious bipartisan budget plan in the Senate on Tuesday to invigorate his push for a big debt-reduction deal, and he summoned Congressional leaders back to the bargaining table this week to “start talking turkey.”

The bipartisan proposal from the so-called Gang of Six senators to reduce deficits by nearly $4 trillion over the coming decade — and its warm reception from 43 other senators of both parties — renewed hopes for a deal days after talks between Mr. Obama and Congressional leaders had reached an impasse.

Financial markets rallied on the news. And with time running out before the deadline of Aug. 2 to raise the government’s $14.3 trillion debt ceiling, Mr. Obama’s quick embrace of the plan left House Republicans at greater risk of being politically isolated on the issue if they continue to rule out any compromise that includes higher tax revenues.

Representative Eric Cantor, the House majority leader who has led opposition to any deal including tax increases, later issued a statement saying the bipartisan Senate plan includes “some constructive ideas to deal with our debt.”

But Mr. Cantor stopped far short of endorsing it. And House Republicans passed legislation on Tuesday evening calling for deep spending cuts and the adoption of a constitutional amendment requiring a balanced budget. Though the legislation has no chance of passing the Senate, the 234-to-190 vote was a symbolic statement by conservatives heading into the end game of a confrontation whose economic and political stakes are hard to overstate.

The Senate group’s plan, modeled on the recommendations last year of a bipartisan fiscal commission established by Mr. Obama, calls for both deep spending cuts and new revenues through an overhaul of the income-tax code.

But while its sponsorship by staunch conservatives as well as liberals suggested enough flexibility within both parties to get a deal eventually, it would be all but impossible to turn it into detailed legislation — at the moment it is a four-page outline — and pass it in less than two weeks. Both parties were considering ways to use the proposal as the basis for a broader budget agreement if they can find a way to get past the immediate pressure to increase the debt limit.

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President Barack Obama remarked on a new proposal for raising the nation's debt ceiling.Credit
Stephen Crowley/The New York Times

Tuesday marked the return to the bipartisan Senate group of Senator Tom Coburn, a conservative Republican of Oklahoma, two months after he abandoned the effort by two other Republicans and three Democrats to reach a deal, saying it would not cut spending enough. On Monday he had laid out his own $9 trillion debt-reduction plan, but acknowledged it could not be passed.

Mr. Coburn’s willingness to sign on to the bipartisan approach signaled that at least some conservatives, having made their principled point, might now be ready to bargain.

And Republicans increasingly are showing signs of splintering. Some conservatives within Congress and outside have become increasingly vocal in asserting that the party is at risk of putting ideological purity ahead of the chance for a major deficit reduction that includes substantial Democratic concessions, including cuts in Social Security, Medicare and Medicaid spending.

In appearing in the White House briefing room just hours after the Gang of Six went public with its proposal, Mr. Obama sought to use the development to increase the pressure on House Republicans even as they moved toward a vote on their bill.

The bill passed by the House would slash spending for next year, cap future spending levels and advance a constitutional amendment requiring a balanced budget. Its passage was a rejoinder of sorts to a plan hatched by the Republican leader, Senator Mitch McConnell of Kentucky, that would allow Republicans to accede to a $2.4 trillion increase in the government’s debt limit without actually voting for it, but also without the dollar-for-dollar spending cuts that House Republicans had demanded in return.

The House bill “isn’t the easy choice,” said Representative Rich Nugent, Republican of Florida, “but it’s the right choice.”

House Democrats excoriated the Republican plan, which they said would devastate entitlement programs though the mandatory spending cuts as a result of the cap. “Regardless of what other parts of this bill say,” said Representative Jerrold Nadler of New York, ”there is no way to meet these goals without destroying Medicare, Medicaid, Social Security, veterans’ programs, and military preparedness.”

Democrats are certain to make the House Republicans’ proposal an issue in the 2012 elections, along with the House Republicans’ budget passed earlier this year that would remake Medicare and Medicaid. But most attention shifted to the Gang of Six blueprint, and the reaction to it from the White House and Congressional leaders, who were cooler to it than Mr. Obama.

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House Republicans demanded that Mr. Obama give Congress a written debt-ceiling proposal.Credit
Stephen Crowley/The New York Times

While Mr. Obama said he did not agree with all of the senators’ plan, by his endorsement of its thrust and his remarks to reporters, he plainly sought to isolate further the House Republicans.

“We have a Democratic president and administration that is prepared to sign a tough package that includes both spending cuts and modifications to Social Security, Medicaid and Medicare that would strengthen those systems” while also providing new revenues, Mr. Obama said. And, he added, “we now have a bipartisan group of senators” and a majority of Americans who agree with such a balanced approach.

Forty-nine senators, 25 Democrats and 24 Republicans, were present for a closed-door meeting in the Capitol where those in the Gang of Six, except Mr. Coburn, outlined the debt-reduction plan that had been seven months in the works.

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“It is early to say, but their timing is good,” said Senator Lamar Alexander, Republican of Tennessee. He added, “It helps that the three Republicans senators are three of the most conservative, most respected members of the Senate who are Republicans.”

Besides Mr. Coburn, those are SenatorsMichael D. Crapo of Idaho and Saxby Chambliss of Georgia, who formed the group with Senator Mark Warner, Democrat of Virginia. The other two Democrats are Senators Richard J. Durbin of Illinois and Kent Conrad of North Dakota, chairman of the Senate Budget Committee.

A spokesman for Speaker John A. Boehner said, “This plan shares many similarities with the framework the speaker discussed with the president, but also appears to fall short in some important areas.”

The timing displeased both Senate leaders — the majority leader, Harry Reid, Democrat of Nevada, and Mr. McConnell — who have been negotiating the fallback plan to raise the debt limit that Mr. McConnell initiated last week. At a closed-door luncheon for Democratic senators, Mr. Reid gave Mr. Warner 24 hours to develop a plan on how to move forward — a challenge the Gang of Six met later to discuss.

“I’m happy to work and use anything in the Gang of Six that we can,” Mr. Reid said. “But remember we only have 13 days — 13 days — and there’s a number of senators who have said they’ll do everything they can to stop the debt ceiling from being increased, that they would in effect allow us to default on our debt.”

After the Republican senators’ luncheon, Mr. McConnell said of the Gang of Six outline, “I haven’t had a chance to decide how I feel about it.”

Carl Hulse contributed reporting.

A version of this article appears in print on July 20, 2011, on Page A1 of the New York edition with the headline: Bipartisan Plan For Budget Deal Buoys President. Order Reprints|Today's Paper|Subscribe